Pottsville Operations Seeks Approval of $750,000 Plan-Dispute Deal

Pottsville Operations, LLC's chapter 11 case has shifted from an operating sale into a contested liquidation-plan confirmation fight and, more recently, toward a negotiated resolution of that fight. The Official Committee of Unsecured Creditors is sponsoring a Second Amended Plan of Liquidation that distributes value through a liquidating trust, and PAMC Realty, LLC had objected to confirmation on the ground that the plan's deemed consolidation amounts to an improper substantive consolidation of the operating and property companies. The debtors, the Committee, PAMC Realty, and Benjamin Landa have now jointly moved to settle that dispute under Bankruptcy Rule 9019, and the court has set a combined hearing on the settlement motion, disclosure-statement adequacy, and plan confirmation for August 11, 2026.

Pottsville Operations, LLC and ten affiliated nursing-home entities filed chapter 11 on October 15, 2024 in the U.S. Bankruptcy Court for the Western District of Pennsylvania, lead case 24-70418, to run a going-concern sale of six Pennsylvania skilled nursing facilities. The petition put a 925-bed nursing operation serving 759 residents into a fast-moving operating-business case built around debtor-in-possession financing from its prepetition lender and a stalking-horse sale process.

Debtor(s)	Pottsville Operations, LLC (11 jointly administered debtors)
Court	U.S. Bankruptcy Court, Western District of Pennsylvania (Johnstown Division)
Case Number	24-70418
Petition Date	October 15, 2024
Judge	Hon. Jeffery A. Deller
DIP Facility	$7.782 million new-money facility from Oxford Finance LLC ($3.0 million interim, $2.5 million delayed draw, $282,000 roll-up)
Confirmation Hearing	Rescheduled to August 11, 2026, combined with hearing on a proposed Rule 9019 settlement

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Oxford Finance Debt and the OpCo/PropCo Split

The debtors operate six skilled nursing facilities in Pennsylvania with 925 beds and 759 residents as of the petition date and reported approximately 818 employees. The enterprise is split between operating companies that run the facilities and affiliated property companies that own the underlying real estate and lease it to the operators. That OpCo/PropCo separation is more than a formality here: it became the structural fault line in the later confirmation dispute.

The first day declaration of chief restructuring officer Neil Luria describes a secured capital structure anchored by Oxford Finance LLC. Oxford held a term loan of $49,368,523.63 secured by liens on assets including receivables and mortgages on the PropCo real property, alongside an accounts-receivable revolver that carried no outstanding balance as of September 24, 2024. Eden Senior Care LLC held a smaller secured position of $281,191.50, with a priority security interest in accounts receivable and a second lien on other assets.

Beyond the secured debt, the declaration estimated roughly $56.5 million in unsecured obligations and as much as $16 million in potential nursing facility assessment claims measured through June 30, 2024. That mix of a single dominant secured lender, a large unsecured pool, and state assessment exposure shaped both the sale economics and the creditor recoveries that the liquidating plan would later have to address.

Medicaid Reimbursement and Pennsylvania's Nursing Home Filings

The debtors attributed the filing to labor shortages, wage inflation, and insufficient Medicaid reimbursement rates, the same cost-versus-payment squeeze that has pushed numerous Pennsylvania skilled nursing operators into bankruptcy. Filing-day reporting also described rising pandemic-era costs and significant litigation involving patient care and vendor payments as drivers of the chapter 11 filing. The Pottsville filing arrived as one of a series of distressed senior-care cases moving through the state's courts rather than as an isolated event.

Pennsylvania's skilled nursing sector entered a concentrated wave of insolvencies in 2024. In a roughly two-week stretch in mid-2024, 21 skilled nursing and personal care centers representing about 2,625 beds filed chapter 11, with industry participants warning of further filings to come. Trade coverage of the same period documented sudden closures and displaced residents tied to inadequate government reimbursement and persistent staffing pressure.

The sector's distress also produced a related legal question in the same court. In a separate Western District of Pennsylvania skilled nursing case, the court ruled that nursing facility real property leases are residential rather than nonresidential under Bankruptcy Code section 365(d)(3), a classification that lets debtors defer postpetition rent and that bears directly on the economics of OpCo/PropCo nursing structures like Pottsville's.

DIP Financing and Oxford Cash Collateral

To fund operations through the sale, the debtors obtained up to $7.782 million of new-money DIP financing from Oxford, structured with $3.0 million of interim funding and a $2.5 million delayed draw. The facility priced at 12.5 percent per annum, with a 5.0 percent default-rate premium, and rolled up $282,000 of prepetition bankruptcy-related lending into the postpetition obligation.

The DIP matured on the earliest of 160 days after the petition date, consummation of a 363 sale or plan, the effective date of an approved plan, or acceleration. Oxford received first-priority priming liens on receivables and proceeds, junior liens on other collateral, and superpriority administrative claims, while the carve-out covered U.S. Trustee fees and estate professional fees subject to a post-default cap of $150,000. The financing motion set milestones requiring an interim DIP order by October 18, 2024, bidding-procedures approval by November 1, 2024, a final DIP order by November 15, 2024, and a sale closing by January 15, 2025.

The court entered the final DIP and cash collateral order on November 18, 2024, authorizing continued use of cash collateral on a budgeted basis with weekly variance reporting and providing Oxford budgeted adequate-protection payments plus postpetition liens on prepetition collateral.

$63 Million 363 Sale and the SNF Realty Buyers

The debtors marketed substantially all of their facility assets through a stalking-horse bid of $63 million plus assumed liabilities and cure costs. As initially proposed, the bid protections included a termination fee of $1,890,000 and expense reimbursement of up to $300,000.

The court's bidding-procedures order, entered November 14, 2024, trimmed those protections, capping the termination fee at $1,590,000, holding expense reimbursement to $300,000, and adding a deposit true-up to $1.5 million if DIP obligations fell below that amount. The procedures set an auction for January 13, 2025 and a sale hearing for January 15, 2025.

Following that process, the court entered an order approving the sale of substantially all facility assets other than accounts, free and clear of liens except for assumed liabilities and permitted exceptions. The buyers were a set of facility-specific entities including Hampton SNF Realty, Kingston SNF Realty, Pottsville Realty, Williamsport North SNF Realty, Williamsport South SNF Realty, and Yeadon SNF Realty, together with related operating entities identified in the sale order. The disclosure statement states that the Pottsville sale closed effective February 1, 2025, and later fee filings report that the related Care Pavilion sale closed effective June 1, 2025.

Committee Liquidating Plan and the Pottsville Trust

With the assets sold, the case turned to distributing the proceeds. The Official Committee of Unsecured Creditors is sponsoring a Second Amended Plan of Liquidation that uses deemed consolidation for distribution purposes only, while expressly stating that the plan does not effect substantive consolidation of the debtors. That distinction sits at the center of the contested confirmation process.

The plan contemplates creation of the Pottsville Liquidating Trust, with Ronald Winters of Gibbins Advisors serving as liquidating trustee. The trust is to receive Pottsville trust assets on the effective date, after holders of allowed claims in the designated beneficiary classes are treated as exchanging their claims for beneficial interests in the trust, and its stated purpose is to collect, liquidate, and distribute trust assets to maximize net recoveries without unduly extending the trust's life. The plan supplement requires the debtors, trustee, and interest holders to treat the vehicle as a liquidating trust for tax purposes.

Solicitation identified Classes 3, 5, and 6 as the voting classes, and the vote tabulation reflected strong acceptance in the general unsecured class: 35 accepting ballots representing $2,889,570.79 against 2 rejecting ballots representing $73,403.41. The insured-claims class was split, with the result divided 1-1 by both ballot count and dollar amount, leaving the contested issue a legal one rather than a question of creditor support.

PAMC Settlement and Continuing Case Litigation

PAMC Realty, LLC objected to confirmation on December 16, 2025, identifying itself as an equity holder in the PropCo entities and asserting an economic interest in sale-related assets, including a $10 million Pottsville buyer note and related cash proceeds. PAMC argued that the plan's deemed consolidation is effectively a substantive consolidation, and that the committee had not satisfied the Third Circuit's Owens Corning standard because the debtors allegedly maintained corporate separateness before the petition.

PAMC further contended that consolidation would prejudice PropCo owners by diverting assets that should remain available to PropCo stakeholders toward OpCo liabilities, and it asked the court to deny confirmation. Benjamin Landa later filed a joinder to PAMC's objection, aligning a second party behind the challenge.

The Committee responded on March 13, 2026, countering that the deemed consolidation is an administrative voting-and-distribution mechanism rather than a substantive consolidation, arguing that the OpCo debtors generated the enterprise's value through staffing, vendor relationships, and patient care while the PropCo debtors held only passive real estate assets. The Committee framed PAMC, an insider equity holder, as seeking to divert the Holdback Note and residual sale value to PropCo equity ahead of OpCo creditors, raising absolute-priority and equitable-subordination principles against PAMC's position.

The court's scheduling order, entered February 24, 2026, defined the "Confirmation Parties" as the Committee, PAMC Realty, LLC, and Ben Landa and set a litigation track toward a contested trial, with expert discovery to close by May 15, 2026 and an original combined confirmation hearing date of June 9, 2026. The confirmation hearing then moved several times as the parties negotiated a settlement instead of litigating the dispute to judgment: the court rescheduled it to July 21, then July 28, and, once a settlement motion was filed, to August 11, 2026.

On July 10, 2026, the debtors, the Committee, PAMC Realty, and Landa jointly moved under Bankruptcy Rule 9019 for court approval of a settlement that would preserve the plan's treatment of the $10 million Pottsville Buyers Note for general unsecured creditors, add a $750,000 cash payment for their benefit, withdraw and expunge PAMC's and Landa's claims and interests, withdraw the confirmation objections, and preserve estate and Committee claims against applicable directors' and officers' insurance policies. In exchange, the Committee and debtors would release avoidance and other estate claims against PAMC and Landa. The settlement is not yet approved; the court set the settlement motion for an August 11, 2026 hearing, the same date as the combined disclosure-statement and confirmation hearing, and on July 16, 2026 the court cancelled the pretrial conference and reset the remaining confirmation deadlines, setting the committee's confirmation brief for August 3, 2026.

Committee derivative standing over insider transfers. Separately from the PAMC dispute, the Committee sought authority to pursue estate claims that the plan otherwise reserved for a post-confirmation liquidating trustee. On April 30, 2026, the Committee moved for derivative standing to assert, prosecute, negotiate, and, subject to court approval, settle claims on behalf of the Pottsville estates, targeting potential prepetition fraudulent transfers under Bankruptcy Code sections 544 and 548 and preferential transfers under section 547 against insider-owners and other defendants alleged to have received estate value. The Committee tied the request to the case's changed litigation posture: the Second Amended Plan preserves the same causes of action for unsecured creditors and originally contemplated post-confirmation pursuit by the liquidating trustee, but the Committee sought standing to act directly once the PAMC and Landa objections extended the confirmation timeline. The court entered a default order granting the Committee derivative standing on May 21, 2026, authorizing it to prosecute the identified causes of action.

Nextiva and Rhodes matters. The jointly administered cases have continued to generate contested claims into July 2026. On July 20, 2026, Pottsville and Nextiva, Inc. jointly moved to continue a hearing on Nextiva's $27,763.46 administrative-expense application against Cliveden Operating LLC, one of the jointly administered Care Pavilion debtors, over allegedly unpaid postpetition VoIP services. The court continued that hearing to September 29, 2026 the following day while the parties work toward a resolution. The same day, the court granted Tania Rhodes limited relief from the automatic stay to continue her Eastern District of Pennsylvania civil action against Tucker Operating LLC through judgment, while preserving her proof of claim and requiring that any recovery first be sought from applicable insurance; the order made no merits determination.

Professional Retentions and Fee Activity

BakerHostetler serves as lead counsel to the debtors, with Raines Feldman Littrell, LLP as local counsel and SOLIC Capital Advisors, LLC providing chief restructuring officer Neil Luria and financial-advisory services. FTI Consulting also worked on the case, with monthly fee statements continuing into early 2026.

Interim fee activity reflects a still-active wind-down rather than a closed estate. Baker's fourth fee application covered August 1, 2025 through October 31, 2025 and sought $94,784.00 in fees and $59.40 in expenses, with $18,970.80 remaining after interim payments. Raines Feldman Littrell's fourth fee application covered the same period and sought $49,755.50 in fees and no expenses, with $9,951.10 still requested after prior interim payments. Monthly fee notices for Baker and FTI continued into February and March 2026.

FTI Consulting's fee activity continued through the spring: its sixth interim fee application covered financial-advisory work for the Committee from February 1 through April 30, 2026, and the court entered a default order on July 16, 2026 allowing $67,122.00 in fees and $166.15 in expenses for that period.

Key Timeline

Date	Event
October 15, 2024	Chapter 11 petitions filed
October 25, 2024	Official Committee of Unsecured Creditors appointed
November 14, 2024	Bidding-procedures order entered
November 18, 2024	Final DIP and cash collateral order entered
January 13, 2025	Auction canceled after no qualified bids beyond the stalking-horse bid; stalking-horse bidders deemed successful
January 15, 2025	Sale order entered
February 1, 2025	Pottsville sale closed effective
June 1, 2025	Care Pavilion sale closed effective
November 14, 2025	Second Amended Plan of Liquidation and Disclosure Statement filed
December 2, 2025	Plan supplement filed with Liquidating Trust Agreement
December 16, 2025	PAMC Realty filed objection to confirmation
January 6, 2026	Benjamin Landa filed joinder to PAMC objection
January 29, 2026	Vote tabulation declaration filed
February 24, 2026	Scheduling order for confirmation entered
April 30, 2026	Committee moved for derivative standing over insider transfer claims
May 21, 2026	Court granted Committee derivative standing
June 1, 2026	Confirmation hearing rescheduled to July 21, 2026
July 2, 2026	Confirmation hearing rescheduled to July 28, 2026
July 10, 2026	Debtors, Committee, PAMC Realty, and Landa jointly moved for Rule 9019 settlement approval
July 13, 2026	Settlement motion and combined confirmation hearing set for August 11, 2026
July 16, 2026	Pretrial conference cancelled; confirmation brief due August 3, 2026; FTI sixth interim fees allowed
July 20, 2026	Pottsville and Nextiva jointly moved to continue Nextiva's administrative-expense hearing
July 21, 2026	Court continued Nextiva hearing to September 29, 2026 and granted Tania Rhodes limited stay relief

Frequently Asked Questions

What did Pottsville Operations sell in its chapter 11 case?

The debtors sold substantially all of the assets of their six Pennsylvania skilled nursing facilities through a 363 sale anchored by a $63 million stalking-horse bid. The Pottsville sale closed effective February 1, 2025, and the related Care Pavilion sale closed effective June 1, 2025.

Who is the proposed liquidating trustee?

Ronald Winters of Gibbins Advisors is designated as liquidating trustee of the Pottsville Liquidating Trust under the Committee's Second Amended Plan of Liquidation. The trust would collect, liquidate, and distribute trust assets to plan beneficiaries.

What is PAMC Realty objecting to?

PAMC Realty, an equity holder in the property-owning entities, argued that the plan's deemed consolidation is effectively a substantive consolidation that fails the Third Circuit's Owens Corning standard and would divert PropCo assets toward OpCo liabilities. Benjamin Landa joined the objection.

Have PAMC Realty and Benjamin Landa settled their objection?

The debtors, the Committee, PAMC Realty, and Landa jointly moved on July 10, 2026 for approval of a Rule 9019 settlement that would preserve the plan's treatment of the $10 million Pottsville Buyers Note, add a $750,000 cash payment for unsecured creditors, and withdraw PAMC's and Landa's objections and interests. The settlement is not yet approved and is set for hearing on August 11, 2026.

When is the confirmation hearing for the liquidation plan?

The court has set a combined hearing on disclosure-statement adequacy, plan confirmation, and the Rule 9019 settlement motion for August 11, 2026 in Pittsburgh, after several reschedules while the parties negotiated the settlement.

Other skilled-nursing and healthcare chapter 11 cases with similar liquidating-trust wind-downs include Guardian Healthcare's 19-facility sale, Senior Care Centers' Texas skilled nursing freefall, and Center City Healthcare's liquidation plan and Hahnemann wind-down.